"Three big shots" and Powell successively stated, will the Fed "not cut in July, cut in September"?

The two major US Federal Reserve officials successively made significant statements, hinting that the timing of interest rate cuts is approaching but not yet ready, further increasing the probability of a rate cut in September.

The Fed's "three big shots" Williams stated in an interview yesterday that the cooling of the job market and inflation data indicating a deflationary trend are positive signs. If inflation continues to slow down, a rate cut will be considered in the coming months, with more economic data expected between July and September.

On the same day, the popular Fed voter Bullard changed his stance and emphasized the importance of preventing further slowdown in the labor market. Over the past two years, Bullard's remarks have focused on the necessity of reducing inflation, believing that the Fed will lower interest rates after another one or two months of good inflation data.

Nick Timiraos, a well-known financial journalist known as the "Fed News Agency," stated that the Fed is winning the battle against inflation but is unlikely to take action at the meeting in two weeks. If the trend of slowing inflation continues, the Fed will cut rates at the September meeting.

"Three big shots": If inflation continues to slow down, a rate cut will be considered in the coming months

Williams stated:

There are signs that the US labor market is cooling down, and the inflation data over the past three months is "getting closer to the deflationary trend we want."

These are positive signs, and I hope to see more data to further confirm that inflation is steadily moving towards the 2% target. In fact, we will learn more economic data between July and September.

Previously, Fed officials stated that if the labor market unexpectedly weakens, or once they are convinced that inflation is returning to 2%, they will start cutting rates.

Nick Timiraos believes that this statement conveys the following message:

Williams hinted that the Fed is close to cutting rates but not yet ready to do so. Even if one or two officials support it, the Fed is unlikely to cut rates in July; instead, if the economy remains stable, the Fed may consider cutting rates in September.

In addition, Williams believes that the "last mile" of lowering inflation is not difficult, as different inflation indicators are moving in the right direction.

Williams also added that even if the Fed starts cutting rates, interest rates will be maintained at a level that restricts economic activity.

Popular Fed voter "hawk turned dove": Prevent further slowdown in the labor market

The popular Fed voter and leading candidate for the next chairman, Bullard, also echoed this view on the same day.

Bullard stated:

The US economy is getting closer to a state where the Fed can cut rates, while hoping to see "more evidence indicating" that inflation is steadily declining.

Nick Timiraos believes that this means Bullard believes the time for a rate cut is approaching, and the Fed will lower interest rates after another one or two months of good inflation data. This rules out the possibility of a rate cut in July, but keeps the option of a rate cut in September on the agenda. It is worth mentioning that Powell's focus has undergone a significant shift in importance. For the past two years, Powell has been focusing on the necessity of reducing inflation. However, this Wednesday, he emphasized the importance of preventing further slowdown in the labor market. Powell stated:

With inflation cooling off, it is now time to focus more on maintaining a stable job market. Currently, the labor market is in an ideal state, and we need to maintain this state.

Although investors generally expect a rate cut in September, the widespread inflation slowdown in the June CPI report has led some economists to speculate whether the Fed might start cutting rates at the meeting in two weeks. Goldman Sachs believes, why wait? The reasons for a rate cut are clear, and it should be "cut in July" to avoid political risks